Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Steven Parker owns and operates Steven's Septic Service and Legal Advice. Steven's two revenue generating (production) operations are supported by two service departments: Clerical and

Steven Parker owns and operates Steven's Septic Service and Legal Advice. Steven's two revenue generating (production) operations are supported by two service departments: Clerical and Janitorial. Costs in the service departments are allocated in the following order using the designated allocation bases:

Clerical:

Variable cost: expected number of work orders processed

Fixed cost: long-run average number of work orders processed

Janitorial:

Variable cost: labor hours

Fixed cost: square footage of space occupied

Average and expected activity levels for next month (June) are as follows:

Number of Work Orders
Expected Average Labor Hours Square Footage
Septic Service 50 80 560 1,800
Legal advice 25 20 840 2,200
Clerical 20 20 400 1,600
Janitorial 5 20 200 1,000

Expected costs in the service departments for June are as follows:

Clerical Janitorial
Variable costs $ 12,000 $ 4,200
Fixed costs $ 8,400 $ 800

Under the step method of allocation, how much Clerical Service cost should be allocated to the Septic Service operation for June? (Assume Clerical costs are allocated before Janitorial costs.).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

Calculate the payback period for the investment.

Answered: 1 week ago